Tiffany and eBay in Fight Over Fakes - New York Times

Tiffany & Company has accused eBay of creature a distribution network that enables the trading of counterfeit Tiffany items.

“We simply felt that we were chasing ourselves,” he said,The Alternation of Cartier Bracelet, and “chasing phantom sites that would be taken down one day and pop up distinct daytime, and so we were in a vicious surround.”

But in his closing argument last Tuesday, James B. Swire, the lawyer for Tiffany, told Judge Sullivan that eBay instantly advertised the sale of Tiffany jewelry on its home sheet, and “because eBay profits from the sales generated by these and other operations,” Tiffany considers its deeds straight license infringement.

If Tiffany wins its case, not merely could other lawsuits emulate, yet eBay’s business prototype could be intimidated because it would be laborious and extremely valuable for the company, based in San Jose, Calif., to police a site that now has 248 million registered users international and nearly 102 million items for sale at any one period.

SAN FRANCISCO, Nov. 26 — For annuals, eBay has defined itself simply as an online marketplace that correlates buyers and sellers.

Mr. Potter said eBay did administer to reserve other illegal items — people organs, firearms, and child pornography — off the site. “The truth of the material is that whether eBay ambitioned to reserve counterfeit Tiffany goods off, it probably could,” he said.

Last Tuesday, Judge Sullivan answered Michael J. Kowalski, Tiffany’s leader and capital administrative, about the fathom Tiffany has taken to trace down and prosecute the counterfeiters.

Mr. Swire joined that “there’s naturally much in the log to show that eBay is liable for contributory infringement.”

Mr. Kowalski said it had been difficult — and often fruitless — to chase sellers who list counterfeits on eBay, as they frequently alteration identity.

“I will hopefully turn this around very rapidly afterward that,” he told the lawyers.

Mr. Potter said that if the magistrate found that eBay had the same duty for flea markets and traditional retail stores to not sell counterfeit products, “eBay will possible must either stop auctioning famous luxury products or radically alter the way it does affair so that it can precertify the authenticity of those products.”

Although Judge Sullivan gave mini indication of how he might rule, he pointed to lawful precedents that have found that if a contractor or distributor continues to afford a product knowing it is engaging in trademark infringement, that manufacturer or distributor is “contributorily responsible” for any injure done as a outcome of the mendacity.

Tiffany has requested injunctive relief that would necessitate eBay to change its procedures to exclude counterfeit silver Tiffany merchandise from its auctions. Judge Richard Sullivan taught either sides to file post-trial briefs along Dec. 7.

Bruce Rich, eBay’s lawyer, told the tribunal the company had performed its prerequisite to discourage the sale of forgery merchandise. In his closing contention, he said the statute places the primary policing responsibility ashore the trademark landlord, Tiffany, for Tiffany has the necessary expertise to identify counterfeits of its products.

“As a marketplace, we not take possession of any of the goods sold on the site, so it would be impossible for us to solely resolve the authenticity of an item,” Mr. Durzy said. “And we go on and beyond what the law requires us to do to keep counterfeits off the site.”

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In its native grumble, Tiffany nourished that anyone selling 5 or more pieces of jewelry said to be Tiffany’s at a deduct “is about certainly selling counterfeit Tiffany goods.” Other producers of luxury goods have complained that sales of counterfeit items are hurting their businesses.

Mr. Durzy said that eBay had put in place appended anticounterfeiting measures since Tiffany filed its suit. These contain closer monitoring of categories chosen most often by counterfeiters, like expensive jewelry and handbags, as well as PayPal verification requirements, selective restrictions on sales volume and limits on cross-border sales.

Of lesson, fakes are sold everywhere, as anyone trying to evade the street vendors selling fake designer handbags in Times Square can attest. But the anonymity and reach of the Internet makes it faultless for selling knockoffs. And as the biggest online marketplace, eBay is the hub of a fashionable universe of counterfeit products.

“The fact that eBay has chosen to set up its business in a means that makes it extremely difficult for it to monitor the merchandise that is sold at its auctions is not a ward,” said Geoffrey Potter, chairman of the anticounterfeiting practice at Kramer Levin Naftalis & Frankel, a New York law tight.

Hani Durzy, an eBay negotiator, said eBay was not responsible for determining whether every product sold on the site was fake.

But in a weeklong settee trial in Federal District Court in Manhattan that ended last Tuesday, lawyers for Tiffany & Company argued that the online auction house was far more than that: it is a distribution network that enables the trading of counterfeit Tiffany items.

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In the end, Mr. Kowalski said, “The center of the issue was the delivery network,” referring to eBay.

When Tiffany filed its suit against eBay in 2004, it said that Tiffany employees had trolled eBay to find imitation Tiffany silver jewelry and concluded that 73 percentage of 186 pieces they purchased on eBay were counterfeit.

In his beginning expression last week, Mr. Swire, Tiffany’s lawyer, said that in 2003 Tiffany put eBay on notification about the counterfeit items and requested that the company investigate. Yet “eBay simply turned a blind eye,” Mr. Swire said.

After each side presented closing arguments, the judge noted what he called “a fundamental disparity with esteem to what the law is here.”

“One way that eBay could do this would be to require testimony that Tiffany had been paid for the items, ahead eBay permits an auction of multiple, alike professed Tiffany products,” Mr. Potter said.

“We’re very pleased with the direction the trial went,” Mr. Durzy said.

“Louis Vuitton believes that human shirk buying their signature bags because of entire the fake ones out there,” Mr. Potter said.